China's production prices are falling, while consumer inflation is slowing due to weak demand.

China's factory-gate prices fell for the second month in a row in November, but consumer inflation slowed, signaling lackluster activity and soft demand in an economy hampered by severe economic controls.

Analysts predicted that the government would keep interest rates low and take steps to encourage confidence.

According to National Bureau of Statistics (NBS) statistics released on Friday, the producer pricing index (PPI) was down 1.3% year on year, unchanged from the annual decrease reported in October. This was slower than the 1.4% drop predicted in a Reuters poll.

The November consumer price index (CPI) climbed at its weakest rate in eight months, rising 1.6% year on year, less than the 2.1% annual increase observed in October but in line with a Reuters poll.

"These data indicate that the economic momentum (continues) to deteriorate," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

A high-level political meeting of the ruling Communist Party's Politburo on Tuesday emphasized that the government would focus on stabilizing economy, stimulating internal demand, and opening up to the outside world in 2023.

Zhang stated that, while the government had relaxed pandemic controls in the previous week, it will take other measures to stimulate the economy.

"The Politburo meeting... highlighted low confidence as a serious economic challenge," he stated. "I anticipate the government to do more to improve market and household confidence, and the government's quick reopening demonstrates its sense of urgency."

Growth in the world's second-largest economy has slowed this year, partly due to the tough COVID-19 limits, while global demand has also weakened.

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